Sunday, November 18, 2012

November 18

As Operation Pillar of Defense enters its fourth day, the Israel Defense Forces continues to prepare for a ground invasion of Gaza, drafting thousands of army reservists.

The IDF struck dozens of targets in the Gaza Strip overnight, including the office building of Hamas Prime Minister Ismail Haniyeh and a police building.

The only question was whether or not Israel would find a reason to attack before or after the election. Just like the last time.

BTW- the best part of this is we can expect the same predictable flame wars and series of events. I can be accused of siding with terrorists, when all I am saying is that leveling a region, killing thousands of innocents and bombing the region into the stone ages is overkill. Then the President will say something measured, like "Israel has a right to defend itself, but the response has been too much," and then AIPAC can have Congress and a bunch of Israel first Democrats condemn the President. The only thing different this time around is that Wexler and Weiner are no longer in Congress to lead the charge.

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The closing of the bakeries that make some of America's most appalling snack foods has been painted by Galtians and The Usual Suspects of the lazy-ass media(as noted here) of yet another example of greedy unions being willing to put almost 20,000 people out of work rather than give up any compensation. It's a Republican wet dream -- an iconic American brand, etched into the memories of just about every American who was ever a child (even if that memory is of crying "all the other kids have Twinkies and Fritos except me!"), forced to close because its selfish, greedy union members won't do their part to keep the company afloat.

The corporate bias against labor is buried in the rhetorical DNA of the company's announcement. Note the New York Times article announcing the closure:

Hostess Brands, the bankrupt maker of cream-filled pastries like Twinkies and Ho Hos, said on Friday that it planned to wind down its operations and sell off its portfolio of well-known brands. The decision comes a week after one of the company's biggest unions went on strike to protest a labor contract.

The paragraph flows from announcing the liquidation to the union strike and the decision to close one week later. This draws a chain of causation between the strike and the closure that sits in the mind of the audience. The important term glazed over by the structure of the paragraph?

"Bankrupt."

Yes, Hostess Brands was bankrupt before this strike happened. Indeed, it's been bankrupt twice in the last 8 years, having only emerged from its last bankruptcy 3 years ago. Think about that a second. That means Hostess managed to go bankrupt, restructure, and run itself back into bankruptcy in 3 years. Perhaps this should get more play than "labor strike" when we discuss the demise of the company.

[snip]

What prompted the company to run itself into the ground again? While the company has publicly placed all its business woes since 2009 on the difficult task of cutting labor costs, the reality is that the company remained behind the times. When America began to seek healthy alternatives to Wonder's delicious but frightening 1950s deadly chemical feel, Hostess trudged onward losing market share to others. When childhood obesity became a national epidemic, Hostess kept churning out fat-filled cakes that sat uneaten on shelves. As the business faltered, Hostess turned blame on the workers.

But a losing business model with cheap labor can generate higher margins for only so long, and while this strike will provide the basis for closing the doors of the company, it will trigger the event that the company itself has planned for some time — liquidation. Hostess will now sell its famous brand names to other companies who can profit off them with smaller-scale production or by tweaking the product itself to better compete. For those at the top of Hostess, this — and not cutting labor costs while chasing diminishing markets — was the brass ring all along, with the owners of the company likely to become rich on these sales. By the way, who owns Hostess? If you guessed, "Private Equity firms seeking to slowly kill the company while milking its resources" you'd be right!

No, Bain Capital does not own Hostess. But the company is a casualty of the same kind of greed that Bain represents. It's not a greed of unions trying to hold onto pension benefits that their members were promised years ago and on which they based their retirement planning. It's the greed of vulture capitalists who make money whether the companies they "rescue" (and in this case it was Hostess, in 2009) succeed or not; and of well-connected executives who stuff their pockets even as they preside over a debacle:

Even as it played the numbers game, Hostess had to face chaos in the corner office at the worst possible time. Driscoll, the CEO, departed suddenly and without explanation in March. It may have been that the Teamsters no longer felt it could trust him. In early February, Hostess had asked the bankruptcy judge to approve a sweet new employment deal for Driscoll. Its terms guaranteed him a base annual salary of $1.5 million, plus cash incentives and "long-term incentive" compensation of up to $2 million. If Hostess liquidated or Driscoll were fired without cause, he'd still get severance pay of $1.95 million as long as he honored a noncompete agreement. When the Teamsters saw the court motion, Ken Hall, the union's secretary-treasurer and No. 2 man, was irate. So much, he thought, for what he described as Driscoll's "happy talk" about "shared sacrifice." Hall says he tracked Driscoll down by phone and told him, "If you don't withdraw this motion, these negotiations are done." Hostess withdrew the motion a few weeks later when Driscoll left -- the same Driscoll who, Hostess told the court in its motion, was "key" to "reestablishing" Hostess's "competitive position going forward." Abbott and Costello couldn't have made this stuff up if they'd gone to Wharton.

The board replaced Driscoll with Greg Rayburn, a restructuring expert Hostess had hired as a consultant only nine days earlier. Rayburn was a serial turnaround specialist who had worked with such high-profile distressed businesses as WorldCom, Muzak Holdings, and New York City Off-Track Betting. He became Hostess's sixth CEO in a decade. Within a month of taking over, Rayburn had to preside over a public-relations fiasco. Some unsecured creditors had informed the court that last summer -- as the company was crumbling -- four top Hostess executives received raises of up to 80%. (Driscoll had also received a pay raise back then.) The Teamsters saw this as more management shenanigans. "Looting" is how Hall described it in TV interviews.

Dick Gephardt, former House majority leader and current CEO , Gephardt Group Rayburn announced that the pay of the four top executives would go down to $1 for the year, but that their full salaries would be reinstated no later than Jan. 1. Hostess pays Rayburn $125,000 a month, according to court filings. At the same time Rayburn became CEO, Gephardt's son Matthew, 41, the COO of the Gephardt Group, was put on the Hostess board as a $100,000-a-year independent director.

It should be noted that Dick Gephardt is a Democrat, that he ran for president in 2004, and that throughout his House career, painted himself as a populist. Greed may be the brand of the Republican Party, but on an individual level it knows no party.

But let's have no further talk of greedy unions destroying Hostess. Union workers are the casualties of bad management decisions, not a deciding force in whether a company goes out of business. The bakery union that was striking in these last weeks had already made major concessions in 2009. It's hard to blame the members for not wanting to take even more while executives and former K Street lobbyists raked in the cash. UPDATE: Also, too.

Thank you, Jeebus, for this gift - Obvious Anagram Reince Priebus plans to run for re-election to head up the RNC:

"Also, I am humbled by the over 130 RNC Members who I have talked to who have pledged their support and public endorsement for me to continue on as Chairman so we can finish the job that we started and continue to grow our Party."

"There must be some more angry old white men out there somewhere," he did not add. (CNN)

"Many, many, many Christians were praying and we really need to address that issue first: where was God? Because there were these '40 Days of Prayer,' there were several of those that took place, where people fasted and prayed for forty days asking the Lord for His intervention on Election Day. We did a program last week where my wife Shirley came in with her vice-chairman John Bornschein and told how three hundred Gideon prayer warriors came to Washington, went to every single office of the House of Representatives and the Senate and prayed for the occupant, prayed for our representatives, went to the White House, went in a vigil to the Supreme Court, which is now at great risk, and went to the Pentagon. People like that were praying all over this country and the Lord said no." - Focus On The Family founder James Dobson, admitting to Concerned Women that the National Day Of Prayer Task Force prayed for God to defeat Barack Obama. But the Lord said "No."

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"So the idea, friends, is to make sure everybody is committing homosexual acts and they're high on drugs, and then they vote for Democrats to increase the size of government and provide pretend security for the people high on drugs. That's the Democratic vision in a nutshell. Somebody write that down, I think that's worth putting on a poster somewhere. That's what Democrats do and they do it well." - Pastor Kevin Swanson, who adds that last week's election also proves that "Americans like to kill their kids." (Via Right Wing Watch)

RELATED: We last heard from Pastor Swanson when he announced that God sent Hurricane Sandy to New York City in anger over same-sex marriage. Swanson has also called for the death penalty for Kermit The Frog over Sesame Street's withdrawal from their partnership with Chick-Fil-A.

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The Postal Service has reported a record $15.9B loss for the year, more than three times last year's loss.

Much of the red ink was due to mounting costs for future retiree health benefits, which made up $11.1 billion of the losses. Without that and other related labor expenses, the mail agency sustained an operating loss of $2.4 billion, lower than the previous year. Postmaster General Patrick Donahoe said the agency has been able to reduce costs significantly by boosting worker productivity. But he said the mail agency has been hampered by congressional inaction on a postal overhaul bill that would allow it to eliminate Saturday mail delivery and reduce its $5 billion annual payment for future health benefits. Earlier this year, the post office defaulted on two of those payments. It is forecasting additional losses next year of roughly $7.6 billion.

The Postal Service is the only government agency required to make prepayments into its healthcare plan.

The Arizona Republic has declared Rep. Ron Barber (D-AZ) won a full term in Congress, defeating his Republican opponent Martha McSally. An analysis by the Republic "determined that McSally would not be able to muster enough votes from the remaining uncounted ballots to surpass the thin lead Barber had held in recent days." Barber plans to make a statement Saturday and McSally has scheduled a press conference for Saturday afternoon.

Ron Barber won a special election in June to finish the term of former Representative Gabrielle Giffords, who was shot in the head last year by a madman. Today's victory gives Barber a full term in office.

Barber was also wounded in the attack last year at Safeway in Tuscon, Arizona.

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A new report from Georgetown University's Health Policy Institute has concluded that expanding Medicaid under Obamacare would actually save the state of Florida $100 million per year.

And Rick Scott says no.

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Cesca: Republicans desperate for a seconf term scandal

I've mentioned this on the blog and on the podcast, but here's Paul Waldman's take on the Republican desperation for a second term Obama scandal and how they're really, really struggling to make it the Benghazi the thing.

So what's going on here? I can sum it up in two words: scandal envy. Republicans are indescribably frustrated by the fact that Barack Obama, whom they regard as both illegitimate and corrupt, went through an entire term without a major scandal. They tried with "Fast and Furious," but that turned out to be small potatoes. They tried with Solyndra, but that didn't produce the criminality they hoped for either. Obama even managed to dole out three-quarters of a trillion dollars in stimulus money without any graft or double-dealing to be found. Nixon had Watergate, Reagan had Iran-Contra, Clinton had Lewinsky, [and don't forget that Bush had the Plame affair and the Abramaoff scandal! –ed] and Barack Obama has gotten off scott-free. This is making them absolutely livid, and they're going to keep trying to gin up a scandal, even if there's no there there. Benghazi may not be an actual scandal, but it's all they have handy.

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Here's a Scary Metric

According to The National Oceanic and Atmospheric Administration (NOAA), October 2012 was the 332nd consecutive month of above-average temperatures.

The average temperature across land and ocean surfaces during October was 14.63°C (58.23°F). This is 0.63°C (1.13°F) above the 20th century average and ties with 2008 as the fifth warmest October on record. The record warmest October occurred in 2003 and the record coldest October occurred in 1912. This is the 332nd consecutive month with an above-average temperature.

If you were born in or after April 1985, if you are right now 27 years old or younger, you have never lived through a month that was colder than average. That's beyond astonishing.

Astonishing is one way to put it. "Frightening" would be another.

I would also point out that last year House Republicans voted for significant cuts to NOAA's budget. And the budget that included said cuts was drafted by none other than Paul Ryan.

The good news (but not good enough) is that nearly half of all new energy generation capacity installed in the U.S. in 2012 was renewable energy according to the Federal Energy Regulatory Commission's Office of Energy Projects.